INVESTMENT BOOM.

New Zealand Herald, Volume LIX, Issue 18021, 21 February 1922, Page 7

INVESTMENT BOOM.

CHEAP MONEY IN LONDON.

RUSH FOR GILT-EDGED STOCKS

UNPRECEDENTED ACTIVITY. By Telegraph—Press Anwr.tion—Copyright A. apd N.Z. LONDON, Feb. 19. Tho past week has been one of extraordinary activity in the gilt-edged securities department of tho Stock Exchange. The upward movement began when tho Government announced the suspension of tho issue of 5 per cent. Treasury bonds. This was regarded as indicating a reduction in the bank rate, and when the reduction was made it was an even more potent influence. Bankers immediately reduced deposit rates to 2J per oend., and with the knowledge that enormous sums of money are still unemployable in trade, buyers soon came along for all Government securities.

Yesterday the movement culminated In a degroo of activity quite unprecedented in the Consol market. Prices roso by leaps and bounds. Dealers wore surrounded by brokers clamouring to buy, and the turnover was enormous, exceeding anything within memory. The sceno in the usually staid Consol market was reminiscent of the rubber market in boom times. Consols, local loans, and war loans were in tho greatest demand, but Colonial stocks participated fully, and brisk business was done in many foreign stocks by investors seeking a higher yield than the return from British Government stocks. Government Issues at PremiumIt is reported that a Government broker was buying, which has revived the idea that the present rise in gilt-edged securities is part of a movement to raise prices to such a lovel as to permit of tho flotation of a big funding scheme on favourable terms. It is noteworthy that practically all Government Issues made during the war period now stand at tho issuo price or a substantial premium, the exceptions being the 3J per cent, war loan issued at 95, and the 4J per cent, war loan issued at 100. The recovery of most of these stocks is extraordinary compared with December 31, 1920. Consols aro 11 points higher, 3i per cent, war loan 9, 4J per cent, war loan 12$, 5 per cent, war loan 13J, the funding loan 12J, and the Victory Bonds 13g points higher. Tho great strength of gilt-edged securities had a favourable effect on the industrial sharemarket, which has become quite cheerful- Although no appreciable expansion of business is noticeable, prices generally have developed a favourable tondeucy. There is an all-round improvement in bank shares, aud tho good recent demand for first-class industrial debentures has becomo even more stronger. Rumours of a Wheat Corner. The wheat market correspondent of the Tunes, commenting on tho fact that the prohibition of Indian wheat shipments ceases on March 31, says that we may have India offering free wheat from the opening of her shipping year, May 1. Tho price is difficult to foresee, but ha suggests a range from 52s 6d for common red' to 60s for finest white. This supply should mean cheaper corn, but it is countered by tlie very extensive organisation holding wheat in Canada, Australia, and the United States. It is questionable if American and Canadian farmers will be able to hold firmly with success, because Australia is a fiercely competitive Keller, and since the New Year has actually sold the unprecedented quantity of 23,700,000 quarters mainly to England. It is rumoured that a great combine with ite seat in Canada has succeeded in getting control of this competitive element so that it will be possible to hold for agreed prices the remaining wheat surpluses of Canada, the United States, and Australia. This would be the biggest wheat corner on record. Metals generally are dull. The tin market is depressed despite recent Ameri- J can purchases of unusually large quanti- ' ties, owing to the prospect of a substantial increase in the visible supplies at the end oi the month. Prices are reaching an unremunerative level for the majority of mines, and a further decline will doubtless cause eventual curtailment of production. The demand for copper, both for home and export, has been disappointing, but the lower prices prevailing may attract buyers. A reasonably low price level is likely to expedite maay schemes of railway re-equipment by electrification, and consumption on a quietly but steadily ,mproving scale is generally expected.